Surgeon Fees and Out of Pocket Costs for Private Surgery
The benefits and downfalls of private health care have been a hot topic of late. In his latest
report for the ABC’s investigative journalism program Four Corners (aired May 28 th 2018),
Norman Swan has again delivered a piece that is more worthy of A Current Affair. Although
the primary aim was to shed some light on the practice of some surgeons who charge
excessive fees, I found the whole program was delivered in a ‘shockjock’ type approach by
comparing healthcare to buying a new Holden and the report did not help consumers to
understand the real drivers to increased costs of healthcare.
Spare a Thought for the Surgeons
I sincerely hope that the public do not lose faith in the vast majority of surgeons who mostly
struggle with the necessity of charging gaps for their service. Most of us just want to help
our patients and get paid a reasonable amount in compensation for the skills we have
acquired and the hours and dedication we put in. None of this compensates for the missed
dinners and weekends with family and friends that most surgeons experience by choosing
As it transpired, I missed my family dinner last night (which was incidentally a Sunday)
because between 5pm and 10pm I was operating on a man who presented with such severe
nerve compression in his low back that his bladder and bowel had stopped working earlier
that day. If he did not have urgent decompressive surgery he may never have regained
continence of his bowel or bladder. I was not on call but I received a call from the hospital to
help when my colleague was not available in time to help. Naturally, I did not hesitate to
help this stranger with his very serious and urgent problem that needed my specific skills.
The discussion of fees was not raised and despite the weekend and evening call out he will
not be out of pocket any more than if he had his surgery on a routine operating list. The
MBS (Medicare Benefits Schedule) schedule has no section recognising the extra burden of
emergency surgery and most surgeons do not place a surcharge on their fee in this
situation. Most surgeons continue to offer an on-call service to the hospitals in which they
work and do not receive any special allowance to be available afterhours and on weekends.
Don’t Be Afraid to Speak Up
I also want exposed my less than honest and self-serving colleagues who make us look
greedy and shonky by charging exorbitant fees. I hope the result of the report is that
patients feel more empowered to ask more about why their surgeon might charge a gap
and patients should feel that asking for a second opinion and or quote is not unreasonable. I
have no problem discussing fees with a patient but generating an informed financial consent
is so complicated that it takes my office manager quite some time to provide an accurate
quote and I would have to reschedule another appointment if it were my duty to go over
this with every patient. Thankfully, most patients in my experience are happy with a general
estimate prior to proceeding with a formal quote. Naturally, in my practice we are happy to
review fees if patients are likely to experience hardship.
The Good Old Days
I am a surgeon in the middle of my career and I do not envy my younger colleagues who
have only recently graduated coming into a very competitive marketplace. I participated in
the no-gap program with health funds for the first 8 years of private practice but realised
my business was not being adequately funded for the complexity of work that I was
undertaking once my practice matured.
When our current RACS president went through surgical training, costs incurred to obtain
training were low, competition after graduation was low, medical indemnity costs were
minimal and private health insurance was more affordable, as were mortgages and school
fees. It is therefore difficult to listen to the rhetoric on fees that comes from these older
surgeons who have already completed their careers and done very well financially. The
Medicare schedule has not kept up with inflation and is regarded by most surgeons to be
antiquated in its procedural descriptors. Thankfully there has been a review in the last 2
years and some of the new item descriptors are welcomed by surgeons so that we can be
clear in our use of the schedule.
You can’t compare apples with oranges
It is not entirely true that one surgical procedure is of the same technical difficulty as
another as suggested by Dr Swan in his report. There are quite clearly high-risk areas of
surgery and surgeons who undertake these procedures are usually hit with much higher
insurance premiums to practice in these high-risk areas. In my area of surgery, the MBS
schedule as it exists does not recognise a complex case over a simple case. This will
hopefully be addressed in the modified schedule due in November.
Obstetrics is one area that has been hit with particularly high insurance premiums. Even
though some women give birth at home or even in the back of a car successfully, it is quite
clearly safest for births to be done in specialist centres under the supervision of specialists.
Unfortunately, this has led to the pubic expectation that every birth should be
uncomplicated. When there are complications of childbirth, the obstetrician is routinely
blamed rather than the institution and the specialist has to pay the medical defence lawyers
to defend their practice even when they have done nothing wrong. If we don’t recognise the
right of the obstetricians to charge for a career that often involves afterhours deliveries and
high insurance premiums then we will have no one willing to offer the service in the private
Regulating the rule breakers
Unfortunately, the vagaries of the schedule have led many surgeons to push the boundaries
of the use of multiple item number codes in order to attract a better health fund
contribution to the costs rather than just charge bigger gaps. Some of these practices are bordering on Medicare fraud but to date no surgeon has been taken to task by the RACS or
Medicare despite it being common knowledge that this is flaunted by many surgeons.
Likewise, the use of excessive gaps is not illegal and the RACS policy is more a code of
conduct that is not easily enforced. It would be very difficult for the RACS to withdraw its
qualification for a surgeon charging excessive fees as suggested by the RACS president
without inviting significant legal challenge as it currently stands.
For a start the RACS has not made any statement about what it regards as “reasonable” fees
by surgeons and we are just as much in the dark about what our colleagues charge for
procedures. This was the intention of the system enshrined in the 1940’s constitutional
amendment that has been designed to keep the ACCC happy. It should be noted that the
AMA have published rates that they believe better reflect the costs of doing business than
the MBS rates and in many cases are more than double the MBS rebate. If a surgeon uses
AMA rates to guide billing then the insurers penalise the patient and do not cover any gap.
Surely the RACS can publish recommended rates or support the published AMA rates as
being reasonable as a guide for surgeon fees and surgeons who bill at around this level
should not have their patients penalised by the health fund.
The Future of Our Health Care
In the current system, surgeons have been asked to make a judgement about what our time
and skills are worth and then apply that to a procedure and a period of aftercare. In many
cases procedures and the aftercare involved vary considerably as do the potential risks and
likelihood of medical indemnity claims. If we cannot seek adequate remuneration then we
will lose specialists prepared to practise in these risky but mostly necessary areas of
medicine and surgery.
As pointed out by Stephen Duckett, “health” is not a free market and can never be when
there is so much regulation around procedure codes and reimbursements. I’m not sure why
we need to continue to pretend that we have a free market, as it is not driving costs down
as pointed out in the report. Many younger surgeons are charging higher amounts as a
statement of worth so that patients feel they are attending a quality service, even when the
surgeon is still quite inexperienced.
Dr Swan should also have also highlighted that the health funds have made the “gaps”
debate complicated by each of them offering a different rebate against the MBS schedule
which they fail to explain to consumers. In particular, the consumer will be penalised if their
surgeon does not agree to a “no-gap” or “known-gap” contract. What might be better is for
consumers to ask the insurers to be more transparent about what they are likely to cover on
a group of common operations so that they can compare the market better. As it stands the
health fund policies are harder to understand and compare than your phone contract. In
many cases, patients are being conned into policies that do not cover them for much more
than what they would be entitled to as a public patient and these “junk” policies need to be
called out and made unavailable.
If Dr Swan would like the healthcare costs to be more transparent for consumers then he
should apply the same scrutiny to the hospitals, health funds and other profit makers in the
industry and not just scapegoat the surgeons.
I support John Batten’s statement that a surgeon who charges more for a procedure does
not necessarily deliver a better service or better outcome. However, we don’t want surgery
fees to be a race to the bottom with market style bargaining for surgical procedural work. I
believe that this would drive more shonky practices and not reward surgeons for being
diligent and comprehensive in their training and the treatment they offer. On the other
hand, surgeons should not become complacent and we should have a better system to call
out shonky practices and excessive billing for the “con” that it is. In Australia, we have a
healthcare system that many other countries envy so let’s keep it sustainable and tighten up
the regulation and the MBS schedule so that everyone can understand it and play by the
About Dr David Edis
Dr David Edis is an Orthopaedic and Spine Surgeon. David’s areas of special interest include the management of adult spinal conditions as well as hip and knee replacements. He has extensive experience in all facets of spine surgery from simple to complex, covering cervical to lumbo-pelvic conditions. He is an active researcher and medical educator and believes in lifelong learning. He is constantly updating his skills and helping other surgeons.